Governments of developing countries that use this strategy are attempting to limit their reliance on foreign goods. The goal is to develop industry and become less reliant on agriculture. (Subsidization and protectionism used)

+'s Domestic jobs saved, less reliant on MNC's, protection of culture

-'s Possibly less efficient because of lack of competition, trade wars, doesn't benifit from comparative advantage

Term

Export Promotion

Definition

Aims to increase growth by increasing trade. AD=C+I+G+(X-M) if we improve X we will see growth. Usually the focus is on Manf. Goods

-'s This is difficult if the country doesn't already have some manufacturing (Barriers make it hard to repeat the Asian Tiger Model)

Term

Trade Liberalization

Definition

-Removal/reduction of Trade Barriers

ie.

-Tariff barriers

-Quotas

-Export subsidies

-Administrative legislation

-Help countries produce where they have comparative advantage

Term

Bilateral and Regional Trade Agreements

Definition

This reduces tariffs and barriers which allows F of P to move freely and make all partners more efficient.

Term

Diversification

Definition

Countries that are very dependent on one or two products can be greatly harmed by a change in that market. It would benifit the country to work to expand their markets especially to move away from relying on agr. products which tend to have large fluxuations in price.